Deaf School's punk classic What a Way to End it All had become something of an unofficial anthem of the Liverpool Everyman in recent years. The cult band would return for special gigs, and the song title had become a poignant mantra during sad goodbyes there since featuring in the musical Eric's in 2008.

And like many an old punk, it's no secret the renegade theatre has been showing its age. Last weekend marked a "finale" before its closure and the start of a complete rebuild from the ground up, part of a £28m refurb project – no small change in these tight times for the arts. As for finding the right theatre company to pull off such a do, well, there could only be one: Leeds-based Slung Low, who had impressed last year with their site specific promenade production Anthology.

First of all the Everyman opened every nook and cranny to the thousands who came through the doors on Saturday afternoon. As well as being a sneak peek, it served the cannier purpose of proving to the doubters just what a rundown state backstage is in. And in the auditorium, a simple but effective idea of stringing rows of packing labels from the ceiling for people to write their memories. To go by the scribbles, the Everyman's legendary "rock'n'roll" pantos had clearly been a favourite down the years. One recalled seeing Willy Russell stand in for actor Noreen Kershaw and read his own Shirley Valentine instead of cancelling the show owing to her illness. Another raved about seeing Neil Morrissey in Macbeth (they meant David). There were still more from people who had met future spouses there.

"It's been extraordinary," artistic director Gemma Bodinetz said. "I think everyone attached to the Everyman over the years lurched between two states throughout the day – tenderness for things past and excitement for the future." Phillip Key has been reviewing theatre in Liverpool for more than 40 years; he was not alone with his vivid memories of Hooley's Hope Street Wake in 1975, in which the seats were removed and farm animals were allowed to run round the auditorium. In 1980 came Ken Campbell's 10-part The Warp. "It was notorious for some sex scenes," says Key. "One actor told me they had real sex some nights "if we felt like it."

The Liverpool Everyman theatre was founded in 1964, and since then has fostered generations of heavyweight acting talent. Its rep and youth theatre alumni counts Bill Nighy, Julie Walters, Jonathan Pryce, Bernard Hill, Antony Sher, David Morrissey, Cathy Tyson and, they say, "several" of the McGann acting dynasty among them. Walking through the doors as a punter changed Pete Postlethwaite's life, for one. "It was absolutely stunning," he told me in 2008. "I thought 'I don't know what they're doing, but I'd like some of that!'"

What the Ev lacked in budget on its final night, it made up with heart. The evening's public performance closed the road as it attempted a New Orleans funeral-style procession, complete with JCB digger. After a few words and a song, without ceremony or warning the famous red Everyman neon sign was plunged into darkness. After a series of drawn-out farewells over the last few weeks, it was a stark confrontation. Time had finally run out.

Slowly, a replica of each letter came into view on the rooftop of the theatre and was set alight. As the flames warmed the crowds below, a spray painter was elevated up to the reassuringly ugly brown frontage to write "Be back soon" across the facade, where it will remain until the building comes down.

The evening, too, marked the closure of the Everyman Bistro, the independently run bar and cafe in the basement of the Hope Street complex. Many were more upset about the closure of this city-centre haven than anything, and long queues formed as hundreds of punters with decades of memories waited to get in for one last pint and slice of quiche. And when the final drink was served, a trumpeter played The Last Post. What a way to end it all indeed.